What’s going on here?

On September 6, 2024, Vietnamese police raided the Ho Chi Minh City headquarters of software giant VNG.

What does this mean?

VNG, Vietnam's first unicorn, is under legal scrutiny. With an ongoing investigation reported by the company, VNG is actively cooperating with authorities. Despite the probe, VNG assured stakeholders that its business operations—including online games, payment systems, and the Zalo messaging app—are running smoothly. The investigation also involves Zion JSC and Thanh Son Communication Company, two related firms. The timing is notable, as VNG withdrew its US IPO registration earlier this year without explanation, leaving many to speculate about the connection to these legal issues.

Why should I care?

For markets: Navigating turbulent waters.

The raid has caused market ripples, casting doubts on VNG's immediate future and its plans for global expansion. Despite a 30.3% revenue increase in the first half of 2024, totaling 4.3 trillion dong ($174.7 million), investors are wary. This legal hurdle, along with the earlier US IPO withdrawal, has left market watchers skeptical about VNG's near-term trajectory.

The bigger picture: Global implications of local woes.

VNG's predicament underscores the challenges successful startups face when operating internationally. With 14 offices worldwide, VNG's influence spans borders, making this investigation a global concern. The outcome might set a precedent for how tech companies from emerging markets navigate regulatory scrutiny and aspire to list on global stock exchanges.